| The concepts of the core competence of firm have received much attention lately in strategic management theory. It is not only because all corporations will be in a meaning of struggle for existence, but also because the corporations always want to keep sustain-developing capability and own sustainable competitive advantages in future competitive position with the competitors. We have come to a knowledge-economy time, the corporations must face to the new challenges and take part in the competition in the international markets. It is crucial factor to develop and enhance the cognition about the core competence of firm academically and practically.This dissertation is mostly devoted to the research of the core competence of firm, and tries to explore the practical problems in the firms in China, especially the large and middle scale state-owned enterprises and provide certain new concepts for the enterprisers and scholars in the field.The issues discussed and the main conclusions drawn there from are as follows:Firstly, from different perspective, the thesis proposes that the foundation of development and competitive advantage of a firm is the core competence, and attempts to describe the theoretical system of core competence more clearly and precisely with some breakthrough. In common opinion, the theories of firm can be classified as three kinds: inner-resource decision, out-resource decision and the composite. On above basis, the firm's competitive advantages can be attributed to inner-resource decision theory, beginning with Alfred Marshell, in which the resource-based theory (Wernerfelt, 1984) and the dynamic capabilities theory (Teece, etc) are the central theme.Secondly, the exploration in the thesis about the definition and the domains of core competence shows that the division of labor is the origin of core competences. The links and the differences between competition, core competence and sustained competitive advantage are clarified in a new point of view and the basic concepts about the core competence, as well as their characteristics are presented.From the analysis on the division of labor, it can come to three conclusion:(1) The divisions of labor are the foundation of transactions and core competence development. The development course of a firm is a process of competence definitions, while the accumulation of competence is mainly decided by labor division. (2) With the aggregation of the individual capabilities, an entity of firm's competence system is constructed. Since everyone's knowledge, experience and information is limited and different, there will be distinctive differences in different systems, which is important in understanding the competitive differences between firms. (3) The acquisition of knowledge is not free, but from which the firm may produce superior levels of return. The advance in labor division will promote the specialization in a firm and with the accumulated knowledge the firm should bring about a higher balance of labor division.By 'competence', we understand a typically idiosyncratic knowledge capital that allows its holder to perform activities-in particular, so solve problems-in certain ways, and typically do this more efficiently than others. Because of its skill-like character, competence has a large tacit component, and is asymmetrically distributed. It may reside in individuals, but is best seen as a property of organization rather than of individuals.What characterizes the core competence may be: (1) the matter about core competence is of primary strategic importance for firms, which lie inside the firm and is the origin of the competitive advantage. (2) The core competences are valuable resource or capital of the firms. (3) The firm's core competences are complex, that is, they are created by interactions between many different entities, and they may be difficult to imitate or transfer. (4) firm's core-competence decides the strategies space available to the competence system, say, it produces path-dependence.Thirdly, the emphasi...
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